An increase in the sales tax rate on automobiles assembled or manufactured domestically has been approved by the Federal Board of Revenue through the Cabinet’s Economic Coordination Committee (ECC).
The ECC meeting was presided over by Dr. Shamshad Akhtar, the federal minister of finance, revenue, and economic affairs. Other attendees included Mr. Gohar Ejaz, the minister of interior, commerce, and industries; Mr. Hasan Fawad, the minister of privatization and interprovincial coordination; Mr. Sami Saeed, the minister of planning, development, and special initiatives; and Mr. Shahid Ashraf Tarar, the minister of maritime affairs, communication, and railways.
The ECC considered the proposal of the Federal Board of Revenue (FBR) regarding the “Rationalization of Criterion of Enhanced Rate of 25% Sales Tax on Locally Manufactured/ Assembled Vehicles (PCT87.03)”.
After a thorough discussion, the idea was approved, according to a press release that was released following the meeting. The choice would result in even higher pricing for domestically produced automobiles, whose sales fell in the first seven months of the 2023–24 fiscal year.
This category includes “motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars,” according to Pakistan Customs Tariff Code 87.03, which was cited in the official news release.
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A social media user asserted that the decision will result in a price hike for cars with engines larger than 1000cc.
He claimed that in the past, 18% of the tax on cars falling within this group was collected.
Once the federal government approves the new criteria, car prices for Honda City, Civic, Toyota Yaris, Toyota Corolla, and other models are probably going to increase.